Behavioral Finance

What Are You Passionate About?

In recent weeks, I have had so many conversations with people where passion has come up in various ways. So, I thought it would be good to put some more energy into it by commenting on it in my blog. I even did a very interesting interview with one of our Wealth Mentor’s last week on how he had found his passion and what it has meant to his life over the past few years.

My approach in working with client’s has been to fairly early on in the conversation ask them: What are you passionate about? I have found this to be a very powerful question in finding out where their life is at and where they want to go. This is so important if you are helping someone set their goals and direction. I do not really believe you can do financial planning for a person without knowing their passion because it is so fundamental to their life. Having clarity of your passions regardless of what they are means you can make decisions with confidence and commitment. 

When you think about it, this question is very important regardless of what role you are playing in the person’s life. If you are a business consultant of any sort it is important. Or even if you are just a friend, coach or in some way have an interest in the person’s life the question will really open up a great discussion. 

Discussing passion will really help you get below the surface and connect with the person. You will build a fantastic bond and it is likely the memorability factor will be high. You may even change the person’s life because they will be liberated to reveal something that is core to their life which they had not been fully conscious of. This happened to me, and it set me on the path I am on now. 

So, think about bringing this question into every conversation. It may also bring you closer to your own passions.

Sow Into Others Lives and Grow Your Own

Last week a colleague of mine sent me the following quote:


Every time you build into the life of another person, you launch a process that will never end. ? Howard Hendricks

This quote has a very powerful message which I feel all of us should think about and action.

You do not necessarily need to be a wealth mentor or a life coach to help others build their lives. Although, this level of focused training and the personal development coming with it will help you have enormous impact.

Regardless, of what you are doing in your life or where you are at, helping others in some way to build their lives will be a powerful experience for them and for you. You can do this as simply as asking them a great question, being curious about them, going for a walk or doing an activity together, sharing a story, writing an article that gets published to the masses or delivering a workshop. There are many ways to impart your wisdom and life experiences.

Think about what might happen if you help somebody else grow in their lives. They will remember the moment, become more empowered and ultimately want to help many others. They will do it subconsciously any way because of their own growth, but even better if it is intentionally done.

In essence, by helping others grow and build their lives you will be part of a movement which will have amazing and never ending impact.

In recent times, I have become a lot more intentional about helping others of all ages through helping them discover their life purpose. I have found that when people discover their life purpose they want to share the experience with others. What is your life purpose? How could you help other people grow in their lives?

Who is Your Client?

I have had some really interesting conversations with advisors during the past few weeks during presentations. In particular, when I have been talking about family dynamics and asking the question who is your advice really impacting?

Generally, the obvious answer would be that your client is the person who currently has the wealth for which financial planning is required (the Wealth Holder). What about the beneficiaries of the wealth? Their lives are generally being impacted by the decisions that get made in the financial and estate plans. To some degree arent these beneficiaries also your client? In providing advice, you need to understand the unique behavioral styles of BOTH the Wealth Holder and the beneficiaries. If you do not take into account the unique financial personality of the beneficiaries then the plan could be useless once the wealth does transfer to them. Isnt this at least partly why we see so many financial and estate plans practically fall apart, breakdowns in family relationships, and generally dysfunctional behavior?

Also, as an advisor by learning to discover who the beneficiaries are during the life time of the Wealth Holder will help you cement long-term relationships with them.

Another interesting scenario that often comes up is that the person requesting the advice and/or managing the wealth is different to the Wealth Holder. For instance, if a son is managing the financial affairs of his mother whose behavioral style do you need to understand? Is it the mother or the son, or both? I have seen many financial advisors get into difficulties by not truly understanding the financial personality of the son. To a large degree you are dealing with the behavior of the son. You will need to know how to communicate with him and also how his view of the world impacts the planning for his mother. After all, the son will see the world through his lens.

Entrepreneurs Feedback – What Makes People Successful

In a discussion with a group of entrepreneurs, I asked them the question: What Makes People Successful?

I enjoy asking questions like this. I always learn something from others perspectives and insights. It gets me to think at new levels. As you may expect dealing with a diverse group everyone’s responses were great and quite different. I personally think the keys to success are the sum of what everyone said. There are probably more, or in some ways the same points expressed a different way.

Here are the attributes that the group expressed:

  • Confidence
  • Determination
  • Where with all
  • Seeing it all through
  • Execution
  • Emotional intelligence
  • Instincts to see something others do not
  • Patience

Regardless of what you do consider keep these attributes at the top of your mind . If you have any other ideas to suggest, I would like to hear about them.

Personal Confidence…..Remove the Gremlins

How confident are you in the business, financial and life decisions you are making? Do you have times of doubt? Have you ever created thoughts in your mind that are not reality, or what can be called gremlins? These questions are equally valid whether you are an investor, executive or advisor.

When you have confidence almost anything can be achieved, adversity can be handled, your mind opens up to new possibilities, you get unstuck, relationships can get built, people are attracted to you. Personal confidence is an energy force that sustains you. With plenty of confidence, there can be never ending growth in ALL areas of your life.

So, reflect on what you are currently confident about and what may be undermining your confidence.

The degree to which you have personal confidence actually gets down to personal trust. How much do you trust yourself? We all have gremlins floating around in our heads that were falsely created somewhere and they are generally there because we are not so trusting of ourselves. The key to change is building a positive way of thinking to remove the gremlins.

At the top level, this starts with discovering who you are, defining what you exist for and gaining clarity of what is important. Put another way, it is to define what a quality life is for you and then stick to it. Your definition of what is a quality life, which includes your life purpose, will put the framework in place for making confident decisions and cutting out a lot of clutter that may get in the way of your confidence. After all, it is critical you live your unique design.

Nevertheless, there is the day-to-day issue of self-management. Keeping the gremlins out of your head EVERY day is not easy. You can do it by focusing on the questions you ask yourself when key issues or questions come up during the day. Learn to ask yourself positive questions rather than negative, judgemental or critical questions. Go to work knowing you will approach your day this way and then at night question yourself, did I approach everything with a positive mind-set? Then, what can I do tomorrow to build my confidence further? The other aspect is to review your activities and see what is both building and sapping your confidence. This is part of being well prepared, which of itself is a confidence booster.

I would also say you should consider having a coach to be firstly a guide, then encourager and accountability partner in building your confidence. Constructive feedback and powerful questions from a coach who is independent of your life but “with you” will really help.

Once the trust comes, personal confidence accelerates and amazing results can be achieved with harmonious relationships.

Advisor-Client Chemistry

Do you have the right clients? This is a very topical issue for many financial planners, particularly those who have already built a business to a reasonable level. Actually, it is as important as the client selecting the right advisor.

In the end there must be a mutual relationship with the parties comfortable with each other. The relationship cannot start out (but it often does) with the client simply having dollars in the bank account and some financial planning needs, and on the other side the client believing the advisor has the skills and the necessary integrity. In fact, these are all assumed to get to the point of the first meeting. Bob Veres of Inside Information (www.bobveres.com) has written a great article this month called “Segmentation or Bust” mainly directed at advisors to consider the structure of their client base.

Our business is all about looking at the behavioral style of the clients and also the advisors. So, not unexpectedly, the approach we take is to match clients and advisors based on their behavioral style. This is very much an inside-out approach, however all great relationships start below the surface. Human behavior is at the core. The great thing is that the Financial DNA system measures natural behavior which means we can reliably predict the behavioral style of the advisor and client in terms of how that person will always be, particularly under pressure. I would say that our approach must still be blended with a number of other more traditional selection factors such as client size, service style, values, expertise, etc. that are mentioned in Bob’s article.

To help the advisor we have developed an Advisor/Client Compatibility Matrix. The matrix is a one page grid which matches profile styles based on the level of modification that will be required between advisor and client. To be clear, it does not say you cannot work with someone, but it does say who will be easier (green box on the matrix) based on less behavioral modification – this is where communication, chemistry, etc. is likely to be higher. Hence, this is where the relationship will be naturally more sustainable over a longer period with less stress. So if you are an advisor wanting to segment your client base a reliable starting point is now provided.

I do not necessarily advocate that you fire those clients who will require more behavioral modification (red box on the matrix). This will be a warning sign that you have to put more work into adapting to maintain the relationship. Although what you may wish to do is allocate these clients to a partner who is different to you or hire someone who is different to you to provide a complementary style. Many advisors have found this approach to be foundational for selecting their next hire. Or in how they deliver client service with a team-based approach. Hence, the planner may get the relationship started and then another person on the team steps in.

Are you interested in the value of your practice? Importantly for advisors, this approach also helps you to identify to whom you sell your business. The sustainability of the relationships and hence the revenue is critical to business value.